Obama rejects Republicans' 'too little, too late' tax proposal

Lori Montgomery

WASHINGTON: The US President, Barack Obama, rejected on Tuesday a Republican proposal to collect new taxes from high earners by limiting their deductions and tax breaks, insisting that any deal to avert the year-end ''fiscal cliff'' must include an agreement to raise the top income tax rates.

''We're going to have to see the rates on the top 2 per cent go up. And we're not going to be able to get a deal without it,'' Mr Obama told Bloomberg Television in his first TV interview since the November 6 election.

Senior Republican aides said the White House offered no additional response to the plan, maintaining a stony silence.

Mr Obama instead appeared to toughen his stance on tax rates, the central dispute between the two parties.

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''Let's let tax rates on the upper-income folks go up,'' Mr Obama said. ''And then let's set up a process with a time certain, at the end of 2013 or the [northern autumn] of 2013, where we work on tax reform, we look at what loopholes and deductions both Democrats and Republicans are willing to close. And it's possible that we may be able to lower rates … at that point.''

Senior Republicans said they were astonished by the White House reaction to their proposal, which represented their first explicit offer to raise revenue. While the concession came after nearly three decades of strict Republican anti-tax orthodoxy, Democrats dismissed it as too little, too late.

Some conservatives also baulked at the proposal drafted by the House Speaker, John Boehner. Senator Jim DeMint of South Carolina said: ''Boehner's … tax hike will destroy American jobs and allow politicians in Washington to spend even more'' without reducing the deficit. The Heritage Foundation said Mr Boehner had ''abandoned core conservative principles''.

But many other conservatives, including Republican freshmen who have repeatedly frustrated Mr Boehner's efforts to deal with Democrats, said they were withholding judgment on the plan.